"They have non-arms-length arrangements with service providers," said Lack. "They are designed for brokers to charge high fees, not for investors and frankly, nobody should buy a non-traded REIT."

Lack is the founder of SL Advisors. Previously, he spent 23 years at J.P. Morgan primarily in the North American fixed income derivatives and currency trading businesses. Lack's previous book is The Hedge Fund Mirage: The Illusion of Big Money and Why It's Too Good to Be True.

In his book, Lack writes that non-traded REITs are notorious for maintaining an unrealistically stable net asset value, which suggests to him the manager is not updating the value of its holdings. And since the securities are not traded there is no way for investors to know if the value of their holdings has fluctuated.

Lack is also skeptical of the need for hedge funds, calling the industry over-capitalized.

"The industry has too much money to invest in the opportunity set and earn a good return," said Lack. "And the amazing thing is that investors still don't understand that."

Lack also warned investors against buying closed-end funds (CEFs) at the initial public offering price due to high fees. CEFs themselves are okay in his opinion, but he recommends buying them after they start trading.

"There is a 6% fee when they are issued so why not wait until the next day when they are in the secondary market and they are going to trade at a 6% discount to the IPO price," said Lack. Regarding annuities, lack said they are Wall Street darlings because they are illiquid and have high fees. He said there is almost always a better solution for an investor than buying annuities.

"If you never bought another annuity you probably would not regret it," said Lack, adding that investors need to understand what the strategy is supposed to achieve for any financial product before buying it.